Bajaj Holding & Investment forms bearish engulfing candle

The stock of Bajaj Holding & Investment Limited has formed a bullish pin bar candlestick pattern as on the weekend of October 30, 2020, and thereafter, surged sharply up to the level of Rs 3,348.85. The stock has witnessed almost 51 per cent upside momentum in 21 trading sessions.

However, on Tuesday, the stock has formed a bearish engulfing candlestick pattern on the daily timeframe, which suggests a possible trend reversal. The bearish engulfing candlestick pattern is considered to be a bearish reversal pattern that usually occurs at the top of an uptrend.

Among the momentum indicators, the 14-period daily RSI has cooled off after touching an extremely overbought zone and, at present, its reading is 75.99. The RSI is trading below its 9-day average and it is in a falling mode, which indicates further downside momentum. The stochastic has also given a bearish crossover in the overbought region. Moreover, there has been a negative divergence between the daily RSI, daily stochastic, and the stock price movement, suggesting a limited upside.

Going ahead, if the stock sustains below Tuesday’s session low of Rs 3,075 and trades convincingly below this level, then there is a high probability that Tuesday’s high point of Rs 3,348.85 may become a temporary top for the stock.

On Tuesday, the stock of Bajaj Holding & Investment dipped by 4.74 per cent and closed at Rs 3,092.90 per share. The stock opened at Rs 3,295 per share and hit an intraday high of Rs 3,348.85 and a low of Rs 3,075 per share on NSE.